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Maintaining drinking water quality is essential to water companies and their customers, and agricultural non-point source pollution is a major cause of water quality degradation. In this paper, we examine the potential use of payments financed by a water company as incentives for farmers to adjust their agricultural land management practices in order to protect water quality. We use a choice experiment (CE) to measure farmers’ minimum willingness to accept (WTA) requirements to adjust agricultural land management practices in Nidderdale and the Washburn valley (Yorkshire, UK) under a potential local payment for ecosystem services (PES) programme. Latent class analysis of farmers’ CE responses was used to quantify the size and spread of farmers’ preferences and minimum WTA values for compensation payments, and to investigate potential drivers of preference variation. Analysis suggested that …